Enzo Biochem(ENZ) - 2024 Q3 - Quarterly Report

Revenue Performance - Product revenues increased to $8.0 million in the 2024 period, up 7% from $7.5 million in the 2023 period, with a 40% revenue increase in European markets[133] - Product revenues increased to $24.4 million in the 2024 period, up 10% from $22.1 million in the 2023 period, driven by a 10% increase in the US market and a 16% increase in the European market[146] Profitability - The gross profit margin for Products improved to approximately 47% in the 2024 period from 40% in the 2023 period, driven by a favorable product mix and lower input costs[134] - The cost of product revenues decreased to $13.0 million in the 2024 period, a reduction of 5% from $13.7 million in the 2023 period, resulting in a gross profit margin improvement to approximately 47%[147] Expenses - Research and development expenses decreased by 32% to $0.6 million in the 2024 period from $0.9 million in the 2023 period, with no activities related to translational research due to exiting the clinical reference business[135] - Research and development expenses were reduced to $2.0 million in the 2024 period, down 25% from $2.7 million in the 2023 period, following the cessation of translation product development[148] - Selling, general and administrative expenses fell by 28% to $4.5 million in the 2024 period from $6.2 million in the 2023 period, primarily due to reduced consulting fees and lower salaries[136] - Selling, general and administrative expenses decreased to $16.6 million in the 2024 period, a decline of 3% from $17.1 million in the 2023 period, primarily due to lower consulting fees and reduced salaries[149] - Legal and related expenses decreased by 84% to $0.7 million in the 2024 period from $4.3 million in the 2023 period, reflecting reduced legal needs following the Asset Purchase Agreement[137] - Legal and related expenses significantly decreased to $2.5 million in the 2024 period, down 59% from $6.2 million in the 2023 period, reflecting reduced legal needs[150] Interest and Financial Adjustments - Interest income increased to $0.7 million in the 2024 period compared to a net interest expense of $0.1 million in the 2023 period, a favorable variance of $0.8 million[138] - Interest income increased to $2.6 million in the 2024 period, a favorable variance of $2.5 million compared to $0.1 million in the 2023 period, due to net proceeds from the Asset Purchase Agreement[151] - The company recorded a fair value adjustment charge of approximately $0.4 million for the Debentures as of April 30, 2024[139] Foreign Exchange Impact - The foreign exchange loss for the Products segment was $0.5 million in the 2024 period, compared to a gain of $0.4 million in the 2023 period, resulting in an unfavorable variance of $0.9 million[140] - The foreign exchange loss for the 2024 period was approximately $0.9 million, compared to a gain of $1.0 million in the 2023 period, resulting in an unfavorable variance of $1.9 million[153] Cash Flow and Financial Position - As of April 30, 2024, the company's cash and cash equivalents totaled $57.2 million, down from $83.4 million as of July 31, 2023, primarily due to net losses and cash used to pay down liabilities[154] - Net cash used in operating activities was $25.2 million in the 2024 period, an increase of $5.3 million compared to $19.9 million in the 2023 period, attributed to the paydown of accounts payable[155] Legal Matters - A ransomware attack in April 2023 affected approximately 2,470,000 individuals' clinical test information, with potential costs covered up to $3 million by the company's cybersecurity insurance[128] - The company is involved in ongoing legal matters, including class action lawsuits related to a ransomware attack, which may impact future financial obligations and profitability[157] Business Transactions - The company completed the sale of its Clinical Services business to Labcorp for an aggregate purchase price of $113.25 million in cash, effective July 24, 2023[125]